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Evaluation of the policy "Mutuo di riassetto" - phase I

Project researchers

This project, implemented by FBK-IRVAPP in collaboration with the branch of Banca d’Italia located in Trento and with the Statistical Office of the Province of Trento (upon the agreement <Ammortizzatori> signed within the Memorandum of understanding for the Realization of Statistical Analyses), aims at the evaluation of the policy called “Mutuo di riassetto – I fase” implemented by the Province of Trento in 2009, when the financial situation of local firms worsened as a consequence of the economic crisis. The goal of the intervention was to alleviate firms’ credit constraints, improving firms’ financial situation.

This analysis is particularly relevant for several reasons. First of all, the “Mutuo di riassetto” is an indirect industrial policy: it does not directly affect productive processes or firms’ decisions, but it helps firms to deal with financial distress. In particular, the policy improved the financial credibility of beneficiary firms, limiting the distrust of financial operators, an element that was identified as one of the main causes of the credit crunch since 2008. Secondly, although both the OECD and the European Commission support the use of credit guarantee schemes, no evaluation of this kind of policy has been provided yet, leaving a knowledge gap that affects both the economic theory and, most importantly, the capability of public administrations to direct public funds towards the most efficient policies.

Counterfactual analysis is used to evaluate the effectiveness of the intervention, verifying whether beneficiary firms improved their financial situation, with an increase in the proportion of long term debts; whether the intervention reduced the probability of bankruptcy of beneficiary firms; and whether the improvement of the financial situation limited the credit crunch in the following years.